Smart contracts are computer programs stored on a blockchain that will be executed when predetermined conditions are satisfied.
They were first proposed by Nick Szabo in 1994.
They use simply
if/when... then...statements that are written into code on the blockchain.
These actions could include:
- Releasing funds to the appropriate parties.
- Registering a document.
- Sending notifications.
- Issuing a ticket.
Once the transaction is completed, the blockchain is updated.
- It makes the transaction very hard to hack. Hackers would have to change the entire chain to change a single record.
Only parties who have been granted permissions can see the results.
- The terms must be agreed upon by all parties.
They don't need a central authority, legal system, or external enforcement mechanism.